Google VP Dines With FTC Chairman Amid Antitrust Talks

Google’s senior VP of advertising Susan Wojcicki was joined by FTC Chairman Jon Leibowitz for lunch yesterday in Southern California. The two met up at a restaurant at Terranea Resort in Rancho Palos Verdes, even as antitrust investigators prepare to question Google chairman Eric Schmidt.

The FTC brought in a heavy-hitting litigator from Washington, Beth Wilkinson, to run the antitrust investigation. Leibowitz told Bloomberg, “It doesn’t mean that we’ve decided to bring a case at all, it just means that we have very competent counsel who can go toe-to-toe with their very competent counsel,” referring to Google.

One of the issues they’ll look at is whether Google unfairly increases ad rates for competitors, according to the report. Leibowitz also shared that he has met with executives from several other tech companies recently, including Square Inc., Zynga and Mozilla. He told reporters that it’s valuable to keep lines of communication open. However, one might also argue that it’s important for the government to be open, transparent, and remain objective during an antitrust investigation; private lunch meetings, off the record, don’t seem in keeping with those objectives.

FTC and Google = Frenemies?

After the Senate Subcommittee investigation into Google last summer, we saw another questionable move on the part of investigators, this time by Senator Al Franken, who put out a YouTube video promoting a Google small business program even as he was to be providing objective oversight of that investigation.

In December 2011, two of the Senators involved in that Subcommittee investigation wrote an open letter to the FTC recommending further investigation into Google. Among their concerns: “Many question whether it is possible for Google to be both an unbiased general or “horizontal” search engine and at the same time own this array of secondary web-based services from which the company derives substantial advertising revenues.”

The Problem with Progress

Considering the Senators’ request, it’s disheartening to hear Leibowitz announce on-stage at the AllThingsD conference, “There are certainly allegations that the search results have changed or evolved over the years,” he said on stage yesterday at the conference. “We’re trying to figure out if the evidence is there and what the theories are.”

This is the stage they’re at now, after how many complaints? It’s not like no one’s been talking about it. The FTC is trying to comprehend what might be going on, but by the time they determine the impact of changes Google has made to search over the years, it will have changed again twenty times over. Does the government even have a hope of catching up with Google?

The pace at which government moves in comparison to technology companies would be laughable, were the issue not such an important one. On the one hand, over-legislating slows the pace of progress and hinders innovation. But on the other, government has a duty to the general public and other companies to ensure that as new technologies are introduced, profits and corporate interests don’t trump privacy and competition laws.

Can antitrust investigations several months or even years after technology changes are made protect the public and other business interests? I’m inclined to say no, the best they can do is levy fines after the fact.

Google’s Comparison Ads = Affiliate Marketing From the SERPs

In just one example of a change within the organic SERPs, Google recently launched revamped Comparison Ads on queries for credit cards and other financial products, which has some talking about paid inclusion. However, we contacted Google and Comparison Ads seem to be a source of affiliate income for Google, not paid inclusion. The difference is subtle but important; Google receives payment for a sale or no payment at all, unlike in paid inclusion programs, where companies must pay to show up.

A Google spokesperson told us, “The financial arrangements are different in each area (credit cards, flights, hotels, and bank accounts). For example, in some cases the brands shown may make a payment to Google if the user completes a particular action, and in some cases unpaid content may be included.” They also noted this is not the first time Google has used the Google Affiliate Network.

These are the types of changes that cause a bit of buzz as they’re phased in and probably should warrant some kind of third-party, objective review to ensure they are not misleading search users. Is it obvious from the grey “Sponsored” text that Google may be paid if the user clicks through and purchases? Not unless you hover over top of the word itself. Regardless of the payment structure, the concern is that users go to Google organic search for objectivity and relevance, not to be pitched products.

The difference between paid inclusion and affiliate marketing is that displaying paid placements is straight-up advertising, while affiliate marketers use their influence – whether by way of a mailing list, website, or in this case, a search engine – to persuade consumers to buy another company’s products in exchange for a percentage of sales. Does that have a place in organic search? For that matter, does paid inclusion? Search Engine Land wrote about Google’s evolving opinion on the matter.

“Don’t be Evil” – Can We Just Put This One to Bed?

So is Google going to the dark side, turning their back on the “Don’t be evil” mantra? Let’s be real, that statement was the ideal of a couple of young, hopeful, incredibly bright entrepreneurs. Google today is a sprawling corporation, and corporations have one primary objective that trumps all others: to make money for their shareholders.

Google certainly isn’t pure evil; they do amazing work around the world and have probably pushed the boundaries of what’s possible and driven progress more than any other company in the past two decades (yes, including Apple). But neither are they purely good.

Google is a corporation, plain and simple, doing wonderful and not so great things. When they move, they move fast and they go big. Government has their work cut out for them to keep a watchful eye and call a time-out if necessary, but it’s a job that must be done now, not a few years down the road.

Wojcicki is knee-deep in the current antitrust talk as an important influence in the acquisitions of DoubleClick and AdMob. Is it appropriate for the FTC Chairman and the subject of an investigation to enjoy a meal out together, away from the prying eyes of the public? Let us know what you think in the comments.